Details on that runaway Medicaid budget…
Spending per Medicaid enrollee has been relatively flat the past five years, having increased less than 0.4% annually (adjusted for inflation) between FY 2011 and FY 2015. The cost driver has been enrollment, which increased 16.5% over the same period, according to a Joint Legislative Audit and Review Commission (JLARC) report, “Managing Spending in Virginia’s Medicaid Program.”
JLARC summarizes the consequences for Virginia’s General Fund budget:
Medicaid general fund spending has grown by an average of 8.9 percent annually over the past 10 years, while total general fund spending increased by just 1.3 percent. Medicaid spending comprised 22 percent of the general fund budget in FY16, increasing from 14 percent in FY07.
No wonder the Commonwealth can’t afford to give employees a pay raise and shore up their pension benefits (see previous post).
But there is potentially good news. The state still has room to squeeze costs by as much as $40 million per year.
In FY16, Virginia could have saved $17–36 million by not paying [Managed Care Organizations] for the inefficient provision of services. [Medicaid] also does not adjust administrative spending for enrollment increases, and these adjustments would have reduced spending by as much as $8 million in FY16.